Cannot create directory. Permission denied inside docker container

Filesystems inside a Docker container work just like filesytems outside a Docker container: you need appropriate permissions if you are going to create files or directories. In this case, you’re trying to create /newfolder as a non-root user (because the USER directive changes the UID used to run any commands that follow it). That won’t work because / is owned by root and has mode dr-xr-xr-x.

Try instead:

RUN mkdir -p /newfolder
RUN chown newuser /newfolder
USER newuser
WORKDIR /newfolder

This will create the directory as root, and then chown it.